Hengfeng Bank Co. Ltd. has received official approval for a restructuring plan that involves investments from a provincial government and a unit of China’s sovereign wealth fund, reported Caixin.
Hengfeng Bank, one of China’s 12 national joint-stock lenders, will receive a RMB 30 billion ($4.3 billion) investment from an entity controlled by the Shandong provincial government, making the entity the biggest shareholder of the Shandong-based bank once the deal is done.
Meanwhile, Central Huijin Investment Ltd., a domestic arm of China’s sovereign wealth fund, China Investment Corp., will also become a strategic investor. Central Huijin has yet to do its due diligence on the bank, said a senior Hengfeng Bank executive.
The upcoming investment in the lender by state-owned capital marks part of regulators’ efforts to guide high-risk financial institutions into mergers or restructuring to contain risks, reported Caixin.